Three Questions to Ask Yourself to Get Out of Debt

The thought of tackling your debt sometimes seems like an impossible task. Where to start? How much to pay monthly? Should I build up savings first? Will the debt ever end? The answer to that last question is YES! By asking these questions and having your financial goals in mind, you can be on your way to a debt-free life.

What are my debts?

Write down all your debts, whether it be credit cards, auto loans or medical debt. Include the total amount owed, the minimum payments and the interest rates for each account. It may be a long list with a big number at the end, but don’t get discouraged. It’s a process, and before you can know which loans to pay off first you need to know what you are up against.

Which debts should I eliminate first?

When starting this process, make sure you do what’s best for you and your family. Finances aren’t the only thing at play here. Debt can cause tremendous stress, anxiety and a lot of sleepless nights. In your mind, it might make sense to pay off the highest debt first or the debt with the highest interest rate, but there may be another way to go about it. Start with the debts that are weighing on you the most, causing you stress. Another approach is to pay off the smallest debt first to create a feeling of accomplishment and excitement about getting debt-free. Even if it’s a smaller amount and it might not lift a huge financial burden, paying off one debt can build momentum to tackle the next one and so on.

What’s my plan?

Planning ahead and setting goals are vital to your success. Banzai, our free financial education tool, offers a virtual Debt Coach that provides useful strategies to manage your personal debt and create a plan to pay it off using the debt snowball or avalanche methods. The digital coach can review your current spending patterns and create a spending plan that allows you to take charge of your financial situation.

Generally, the quicker you pay off debts, the less you’ll pay in interest. Making small payments on a high-interest loan might seem like it will take forever to pay off the debt, which can be discouraging. Ask and think about what motivates you. For example, if you’re a list-maker, starting off with those small loans first and then checking them off the list quickly will keep you motivated.

The life you want to live is within your reach. Using Banzai’s debt management plan and setting goals can help you pay off debt. After answering these questions, you’ll be well on your way to achieving financial freedom.